‘Infrastructure
status’ typically helps to raise long-term funds at low rates and attract
significant foreign investments. The Government’s recent move to grant
infrastructure status to the logistics sector is
extremely progressive and will to make funding easy and cheap for
companies that operate industrial parks, cold chains and warehousing facilities.

With
massive investments likely to flow in the logistics sector, the Government’s
plan to develop 35 MMLPs to serve ascentres for freight aggregation and
distribution, multimodal transportation, storage & warehousing
and value-added services, is advancing in the right direction.

As per
the Government’s notification dated 20th November 2017, logistics
infrastructure was included by insertion of a new item in the renamed category
of ‘Transport and Logistics’. Logistics infrastructure includes Multi-modal
Logistics Park (MMLP) comprising Inland Container Depot (ICD) with a minimum
investment of INR 50 crore and a minimum area of 10 acres, Cold Chain Facility
with a minimum investment of INR 15 crore and a minimum area of 20,000 sq.ft.,
and/or Warehousing Facility with a minimum investment of INR 25 crore and a
minimum area of 1 lakh sq.ft.

Industrial
parks, cold chains and warehousing facilities,
being labour-intensive by the nature of their businesses, are massive
developments that occupy humungous tracts of land, create massive employment
opportunities and upgrade the market perception of the entire locality.

Typically,
such facilities are located in the peripheral areas of the city where land
availability is not a challenge. Also, accessibility to the port/connecting
highways is a major consideration whilst identifying the location.

These
facilities not only open job opportunities but also create massive housing
demand in the nearby areas. Far-flung areas such as Panvel, Dronagiri, Ulwe, etc. in Mumbai and Sriperumbudur
in Chennai, have developed primarily due to the presence of warehousing
facilities in the nearby areas.

Bearing
in mind that logistics’ facilities employ blue-collared workers and
semi-skilled resources in large numbers, the demand for affordable housing
typically also increases significantly in areas adjoining these complexes.

Between
2013 - Q3 2017, around 6.4 lakh affordable houses (priced < INR 40 lakh)
were added in the top seven cities ofIndia* of which nearly 35% are unsold
as yet. Granting of infrastructure status to the logistics sector is likely to
create a ripple effect and help in reviving demand for affordable houses,
albeit in the medium-to-long term.

Another
school of thought also suggests that land prices in peripheral areas may move
slightly northwards, due to an increase in demand for setting up these
logistics parks.

Although
it is too early to assess if the grant of infrastructure status to the
logistics sector will boost or hinder the affordable housing segment,
peripheral locations in top cities will surely witness a fillip in the next few
years, either due to the increased activity in the logistics sector, or the
Government’s impetus for affordable housing.